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Government watch
Where Common Sense and Consumer Protection Converge
consumers and is seeking to work with the bureau to put parameters around such short-term lending that will protect consumers, while not regulating a valuable product out of the marketplace.
Effective Date
A third area of significant concern for the industry is the bureau’s proposed effective date for the final rule. As proposed, the final rule would become effective nine months after publication in the Federal Register. Once final,
the rule will require numerous
changes to card packaging, Websites and operations and, additionally, will require develop- ment of new software to calculate transactions and fees in the man- ner required by the bureau. It’s important to note that, if the effective date remains as is, the prepaid industry could be imple- menting these complex changes at the same time it’s engaging
in a nationwide rollout of EMV- enabled POS terminals and cards. Given these challenges, the indus- try doesn’t believe nine months is sufficient for implementation and
is requesting the bureau to extend the time for implementation to between 18 and 24 months.
Conclusion
While it’s unclear how likely the bureau is to listen to the industry’s concerns or what changes, if any, it will make in the final rule, it’s worth noting that the bureau’s underlying goals in proposing
the requirements to protect and educate consumers are shared by the prepaid industry. The bureau and industry participants alike support providing consumers with the information they need
to make informed purchases,
as well as protecting consumers from potentially harmful financial products and services. That the bureau and industry participants differ only in the manner of achiev- ing these goals gives hope that changes can be made in the final rule that meet the shared goals, while at the same time alleviating the industry’s concerns regarding implementation of certain aspects of the proposed rule.
Eli Rosenberg and Gray Derrick are members of Baird Holm’s payments group. They assisted members of
the Network Branded Prepaid Card Association in drafting the NBPCA’s comment letter in response to the CFPB’s proposed rule. Eli and Gray
may be reached at erosenberg@baird holm.com and gderrick@bairdholm.com.
endnotes
1 79 Federal Register. 77102 et. seq. (dec. 23, 2014). 2 Id. at 77150.
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The industry’s response to the bureau’s proposed disclosure requirements and the challenges they present has focused on common-sense solutions that achieve the bureau’s goals of informing consumers without confusing them, while avoiding undue burdens on industry participants.